Deepwater Production Sharing Contracts Agreed Upon for Offshore Oil Blocks by NUPRC

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has overseen the formal signing of Production Sharing Contracts (PSCs) for two offshore oil blocks, marking a significant step in consolidating Nigeria's upstream oil and gas reforms.

The ceremony, which took place in Abuja, concluded a process that began with the December 2020 bid round. The blocks, covering about 2,000 square kilometres in the Niger Delta Basin, were allocated by the Nigerian National Petroleum Company Limited (NNPC).

The successful conclusion of these PSCs has been seen as a signal of profound changes in Nigeria's oil industry under the NUPRC. Major international oil companies, including TotalEnergies and Sapetro, have provided new capital for deepwater exploration in Nigeria, signifying their trust in the new PSC law and regulation by the NUPRC.

The Petroleum Prospecting Licences (PPLs) 2000 and 2001 were awarded to the TotalEnergies-Sapetro Consortium. The new PSC framework, enshrined in the Petroleum Industry Act (PIA), ensures value to the federation through signature bonuses, royalties, production milestones, and profit oil sharing.

This framework also aligns with global energy transition realities, as it includes obligations on gas utilisation, cost efficiency, and environmental responsibility. The new PSCs create opportunities for the growth of indigenous service firms, encourage technology transfer, and accelerate the country's decarbonisation commitments.

The benefits of the new PSCs extend beyond the oil companies. Investors under the new PSCs are obligated to develop host communities, comply with environmental remediation standards, and plan responsibly for decommissioning. This aligns with the NUPRC's transparency efforts in the implementation of the PIA and its oversight of licensing terms, cost recovery structures, host community obligations, and environmental safeguards.

Dr Chika Patrick, the Executive Director of the Centre for Energy, Policy and Investment (CEPAI), stated that the new PSC framework and the broader policy direction set by the PIA have been affirmed by the commitment of TotalEnergies and Sapetro to invest fresh capital in deepwater exploration.

The presence of companies with decades of operations in Nigeria stepping forward to take on new frontier assets reflects the trust they now place in the regulatory and governance environment crafted by NUPRC under Komolafe's stewardship. This renewed vigour and credibility brought by the NUPRC are encouraging potential investors to seize the opportunities provided by Nigeria's revamped regulatory, fiscal, and governance regime.

In conclusion, the successful conclusion of these PSCs underscores the profound changes that have taken root in Nigeria's oil industry under the NUPRC. The new PSC framework, along with the broader policy direction set by the PIA, is expected to attract more investments, promote sustainability, and accelerate Nigeria's decarbonisation efforts.